Category Archives: Healthcare

Don’t make the mistake of waiting until the end of December to review your finances. You might not have enough time to take full advantage of some money-saving strategies before the ball drops. Here are some healthy yearend moves you may be able to make.

Check your deductibles

Many health insurance plans have an annual deductible. If you’ve already met yours for the year, now’s the time to schedule any elective procedures you’ve been considering. If it doesn’t look like you’re going to meet your deductible this year, then switch gears and push any non-urgent visits into next year. That might help youmeet your deductible in 2015.

Max out your benefits

Be sure to take advantage of any benefits your health plan provides you free of charge. For example, it may cover an annual physical and various screenings.

If your employer sponsors a wellness program, don’t wait until the end of the year to check your status. You may be eligible for additional rewards for doing something as simple as scheduling a screening.

Review your FSA

If you have a health flexible spending account (FSA) through your employer, check your balance. If you have more money in your account than you can spend by the end of the year, see if the plan offers a grace period so employees can spend down their funds. Or the plan may allow employees to carry over a certain amount to the next year. Find out if your employer offers one of these options.

Tax tips

If you usually itemize deductions on your tax return, you may want to brush up on the details about the medical expense deduction. You won’t be able to qualify for it until your expenses are over 10% of your adjusted gross income (7.5% if you or your spouse is 65 or older). If you’re close to reaching the threshold, it may influence the decisions you make about elective procedures. You can only deduct unreimbursed medical expenses that exceed the threshold.

Health insurance remains a big focus for employers of all sizes as the Affordable Care Act’s provisions are gradually implemented. Starting next year, certain employers will have to offer their full-time employees “affordable” health coverage that provides “minimum value” or pay a penalty if at least one full-time employee enrolls in marketplace coverage and receives a premium tax credit (basically a subsidy for buying the insurance).

The employer shared responsibility rules are applicable only to “large” employers — generally defined in the law as employers that employed on average at least 50 full-time or full-time equivalent employees on business days during the prior calendar year. An employee is a full-time employee for a calendar month if the employee averages at least 30 hours of service per week, and 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.

Although the employer shared responsibility rules become effective in 2015, the IRS recently offered certain transition relief for 2015:

Employers with 50-99 full-time employees. No employer shared responsibility payment will apply during 2015 if an employer has at least 50 but fewer than 100 full-time employees (including full-time equivalents) on business days during 2014 if certain conditions are met. The basic conditions: During the period from February 9, 2014, through December 14, 2014, the employer must not (1) reduce the size of its work force and overall hours of service of its employees in order to qualify for the relief or (2) eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014.

Counting full-time employees. Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the prior year by reference to a period of at least six consecutive months instead of a full year.

Coverage. Employers that are subject to the employer shared responsibility provisions in 2015 must offer coverage to at least 70% of full-time employees, rather than 95%, as one of the conditions for avoiding shared responsibility payments. Additionally, the policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for dependent coverage to begin in 2016.

Medicare is ready to enforce a new rule April1, 2014 requiring doctors to admit people they expect to stay more than two midnights, and to classify anyone else as an observation patient. That Medicare classification, of observation status, can cost seniors thousands of extra dollars if they need post-hospital nursing care. For seniors vulnerable to the observation status problem, the stakes are high.

The Centers for Medicare & Medicaid Services, (CMS), devised this policy as a fix for a sharp rise in extended hospital stays billed as outpatient observation, a trend attributed in part to hospital’ efforts to avoid having their admission decisions challenged by government auditors.

When a patient who meets Medicare’s three-day formula admission requirement moves to a skilled nursing facility, the program covers 100% of the first 20 days. Patients leaving the hospital for a nursing facility after an observation stay pay the full cost out of pocket.

As a result, patients are leaving the hospital against medical advice and foregoing diagnostic tests and medications. Physician-patient relationships are being strained because patients think doctors can admit them when they are really bound by Medicare’s rules.

It is difficult for seniors to protect themselves against this risk. Hospitals are not required to notify patients they are on observation status and it is hardly something families would check during a health crisis. It does not make any sense that a patient spending multiple days in the hospital has not been admitted.

There is currently legislation being pushed that would delay enforcement of the two-midnight policy until October 1, 2014. This bill will provide additional time to get the education out to clinicians and patients so they understand what the rule means and how to operate within it.

Seniors or their families should ask their doctors about admission status. If they find they are on observation status, they should do what they can to get it changed at the time.

As of January 31, 2014, the Center for Medicare and Medicaid Services, (CMS), has delayed enforcement of this rule until October 1, 2014.

They say, “an apple a day keeps the doctor away.” That may be true, but if not and you do incur medical expenses I say, “an FSA today can bring savings your way.” The FSA I am referring to is a health flexible spending arrangement. An FSA is a cafeteria program established by employers that employees can use to reimburse medical expenses. FSAs are typically funded through an employee’s voluntary salary reduction agreement, and the salary that is withheld to fund the FSA is excluded from an employee’s gross income and is not subject to federal income or FICA taxes. Thus, the savings that are available to you if you take advantage of your employer offering an FSA program.

Employees are able to request salary reductions for a health FSA of up to $2,500. This results in a savings of $191 for the employee’s portion of FICA. The potential tax savings for various income tax brackets are as follows for an individual who contributes the maximum $2,500 to an FSA:

As you can see from the above table, health FSA plans are a great tax savings opportunity and the benefit is even greater for individuals with higher taxable incomes. For individuals in the 39.6% tax bracket, they are effectively paying 53 cents on the dollar for the $2,500 of qualified medical expenses they are reimbursed for.

Qualified medical expenses may be incurred by an individual, their spouse and all dependents claimed on their return. To receive the reimbursement for the medical expense you must provide a written statement stating what the medical expense was for and the total amount. Additionally, rather than paying for the medical expense yourself and then being reimbursed, an employer may provide a debit or credit card to employees to use to pay for qualified expenses and the employee will just need to provide the written statement to support the expenditure.

The IRS provides a full list of all qualified medical expenses with Publication 502. Some of the qualified medical expenses included on Publication 502 are:

Prescription medications (note that over the counter medications do not qualify)

An employee can sign up for a health FSA at the beginning of the plan year and must designate how much they want to contribute at that time. One caution of the health FSA is that it is considered a use it or lose it plan. The full designated amount must be used for qualified medical expenses, and typically any amounts not used cannot be refunded to you. An exception is that plans can allow a grace period of 2 ½ months after the plan year end in which expenditures incurred in the current period can be reimbursed from any amounts left from the prior period. A second option is that $500 of unused amounts remaining at the end of the plan year may be carried forward to the next year as long as the 2 ½ month grace period mentioned above is not in effect.

Health FSAs can provide significant tax savings for medical expenses that most of us incur anyway. If you are not currently enrolled in an FSA plan, check with your employer to see if you can start cashing in on these benefits as well.

With significant provisions of the healthcare act set to take effect on January 1, small businesses may want to renew their current coverage early in order to lock in potential lower rates. This loophole in the Affordable Care Act should, in the short-term, help small businesses save money on their healthcare expenses in 2014. If you have a January 1 or later renewal, and if your broker or insurance company has not yet reached out to you, contact them this week to see if you are eligible for early renewal this December.

The Wall Street Journal reported that a Youngstown, Ohio electronics manufacturer with 100 employees will see an increase of 10% if they renew this year, compared to a 26% increase if they wait until the company’s normal March renewal date.

Some states (not Ohio or Michigan) have attached limits or have down-right prohibited early renewals, claiming they will negatively impact everyone. However, we have yet to see this happen. These states’ lawmakers would prefer that their citizens sign up for individual coverage through their states’ exchanges or marketplaces instead of continuing their coverage through a group insurance plan provided by their employer.

The new healthcare law prohibits insurers from denying coverage to those with pre-existing conditions and limits their ability to charge older customers more than three times the premium for a younger, healthier customer. It also specifies certain “essential health benefits” that insurance plans must cover such as prescription drugs, hospitalizations and maternity care, no matter what the mix of employees. As such, insurance companies will provide benefits that previously had been discretionary or specific to certain plans. It is expected that these provisions are part of the reason for the premium increases for 2014.

On October 1, the government released a “representative sampling” of rates for plans sold on the federal small-business health exchange. However, the actual premiums a business will pay will not be available until sometime in November.

Call your insurance company or broker today to explore your options for early renewal. As always, please feel free to call your William Vaughan Company professional with questions or advice.

Just as the new school year gets into swing and your desk is flooded with a fresh stack of paperwork, the October 1 Health Care Reform deadline should appear on your to-do list. If you have at least one employee and generate at least $500,000 in annual revenue, please pay attention: There’s an Obamacare requirement that applies to you—and you must act by Oct. 1, 2013. Penalties for businesses that don’t comply potentially reaching $100 per worker per day.

What is the October 1 deadline again?

All companies, regardless of size, are required to provide notice to their employees of available insurance coverage through the employer or through the public exchange option that will be established by the federal government or the states under the Affordable Care Act.

For new employees hired on or after October 1, 2013, employers must provide notice at the time of hiring (or within 14 days of hiring in 2014 and thereafter).

For current employees that were hired before October 1, 2013, employers must provide notice not later than October 1, 2013.

The notices must be provided in writing in a manner calculated to be understood by the average employee. Notice may be provided by first-class mail or electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor are met. The Department of Labor has provided information about the requirement and model notices (one for employers with health plans and another for employers without health plans) on its website.

Have you heard about the $1 fee per covered member/employee on HRAs and self-insured health plans? Well if you had not before, now you have! Some part of me thinks, it’s a dollar what is the point, and then some part of me thinks what are they going to charge me for next!

So in case you have not heard about it, the Affordable Care Act (ACA) has implemented the Patient-Centered Outcomes Research Institute (PCORI) fee. Isn’t that nice, it’s all about us the patient – see they do care about us! This fee is intended to support the effectiveness of clinical research. It is assessed on self-employed health insurance plans and on HRAs, since they are considered self-insured. A self-insured health plan is a plan that provides for accident and health coverage; but there are some exceptions for things like: separate dental and vision plans, FSA, hospital indemnity plans, and disability income insurance.
Since I know you are so eager to know how to pay this fee, you pay it by July 31st following your plan year on the form 720-Federal Excise Tax Return. However if you offer insurance through a typical insurance company, the insurance company pays the fee, so nothing for you to do.

Now how much is the fee:

For policy years that ended after 10/1/12 but before 10/1/13 the fee is $1 per life covered

Plans with year ends from 10/1/13 before 10/1/14 the fee is $2

Thereafter it is the prior year amount plus an adjustment for medical inflation

The good news is as of now this fee is scheduled to end by 10/1/2019!

There are several exceptions and a hand-full of ways to calculate covered lives, so be sure to look into all the rules. It is also possible that your insurance provider has already contacted you about this. If not be sure to talk to them as well. And for now make sure you make good use of that dollar and buy that coffee or ice cream from McDonalds!